Technology company Evertec is planning to raise $600 million in capital to complete its acquisition of Brazilian technology solutions provider Sinquia. This acquisition would be the largest in Evertec’s history and would significantly increase the company’s income from Latin America. Currently, Latin America represents just over 20% of Evertec’s income, but with the acquisition, this figure would rise to 37%.
Moody’s Investors Service, an accreditation firm, released a report emphasizing the benefits of the acquisition for Evertec. The report states that the acquisition will allow Evertec to establish a stronger presence in the Brazilian market and expand its client base to include banks, investment funds, pension funds, and consortium entities. The financing for the acquisition has been classified as Ba3, indicating a speculative or high-yield debt issue.
Moody’s also highlighted the challenges faced by Evertec, such as income and customer concentration. Currently, 60% of Evertec’s income is generated in Puerto Rico, with Banco Popular representing approximately 30% of the company’s clients. However, the acquisition of Sinquia will help address these challenges and increase Evertec’s diversification.
The report from Moody’s assigned a stable outlook to Evertec based on the expectation that the company will adopt a more aggressive approach to acquisitions and mergers. Additionally, Moody’s projected that Evertec’s revenue will increase from $634 million to approximately $780 million with the inclusion of Sinquia.
Evertec’s share price on Wall Street experienced a significant increase of almost 4.5% after the announcement of the Sinquia acquisition in July. The company’s market capitalization reached approximately $2.69 billion. As of now, Evertec’s market capitalization stands at around $2.38 billion, with a share price of $36.74.
Evertec was established 45 years ago as an initiative by Popular Inc. to introduce automated financial transactions to Puerto Rico. The company has since become a major player in the payment network and commercial procurement services in Puerto Rico, representing approximately 70% of ATH’s electronic transactions and holding a market share of around 60% in commercial procurement services.
Overall, the acquisition of Sinquia is expected to enhance Evertec’s position in the Latin American market, diversify its client base, and drive revenue growth.